,MACROECONOMICS
Fourth Edition
Charles I. Jones
Stanford University, Graduate School of Business
B
W. W. NORTON & COMPANY
NE W YORK LONDON
, To Te r r y ; fo r Au d r e y a n d C h a rli e
W. W. Norton & Company has been independent since its founding in 1923, when William Warder
Norton and Mary D. Herter Norton first published lectures delivered at the People’s Institute, the adult
education division of New York City’s Cooper Union. The firm soon expanded its program beyond
the Institute, publishing books by celebrated academics from America and abroad. By mid-century,
the two major pillars of Norton’s publishing program—trade books and college texts—were firmly
established. In the 1950s, the Norton family transferred control of the company to its employees, and
today—with a staff of four hundred and a comparable number of trade, college, and professional titles
published each year—W. W. Norton & Company stands as the largest and oldest publishing house
owned wholly by its employees.
Copyright © 2018, 2014, 2011, 2010, 2008 by W. W. Norton & Company, Inc.
All rights reserved
Printed in Canada
Editor: Eric Svendsen
Editorial Assistant: Lindsey Osteen
Developmental Editor: Susan Gaustad
Managing Editor, College: Marian Johnson
Project Editor: Sujin Hong
Production Manager: Eric Pier-Hocking
Managing Editor, College Digital Media: Kim Yi
Media Project Editor: Rachel Mayer
Media Editors: Cassie del Pilar and Miryam Chandler
Associate Media Editors: Victoria Reuter and Stefani Wallace
Media Editorial Assistant: Sam Glass
Marketing Manager, Economics: Janise Turso
Art Director: Rubina Yeh
Artist: John McAusland
Designer: Lissi Sigillo
Composition: Graphic World, Inc.
Manufacturing: Transcontinental Interglobe, Inc.
ISBN: 978-0-393-60376-7
W. W. Norton & Company, Inc., 500 Fifth Avenue, New York, NY 10110
wwnorton.com
W. W. Norton & Company Ltd., 15 Carlisle Street, London W1D 3BS
1234567890
, BRIEF CONTENTS
PART 1 PRELIMINARIES
1 Introduction to Macroeconomics 4
2 Measuring the Macroeconomy 18
PART 2 THE LONG RUN
3 An Overview of Long-Run Economic Growth 44
4 A Model of Production 70
5 The Solow Growth Model 102
6 Growth and Ideas 137
7 The Labor Market, Wages, and Unemployment 175
8 Inflation 205
PART 3 THE SHORT RUN
9 An Introduction to the Short Run 234
10 The Great Recession: A First Look 255
11 The IS Curve 278
12 Monetary Policy and the Phillips Curve 309
13 Stabilization Policy and the AS/AD Framework 347
14 The Great Recession and the Short-Run Model 385
15 DSGE Models: The Frontier of Business Cycle Research 415
PART 4 APPLICATIONS AND MICROFOUNDATIONS
16 Consumption 448
17 Investment 470
18 The Government and the Macroeconomy 496
19 International Trade 520
20 Exchange Rates and International Finance 547
21 Parting Thoughts 583
iii
Fourth Edition
Charles I. Jones
Stanford University, Graduate School of Business
B
W. W. NORTON & COMPANY
NE W YORK LONDON
, To Te r r y ; fo r Au d r e y a n d C h a rli e
W. W. Norton & Company has been independent since its founding in 1923, when William Warder
Norton and Mary D. Herter Norton first published lectures delivered at the People’s Institute, the adult
education division of New York City’s Cooper Union. The firm soon expanded its program beyond
the Institute, publishing books by celebrated academics from America and abroad. By mid-century,
the two major pillars of Norton’s publishing program—trade books and college texts—were firmly
established. In the 1950s, the Norton family transferred control of the company to its employees, and
today—with a staff of four hundred and a comparable number of trade, college, and professional titles
published each year—W. W. Norton & Company stands as the largest and oldest publishing house
owned wholly by its employees.
Copyright © 2018, 2014, 2011, 2010, 2008 by W. W. Norton & Company, Inc.
All rights reserved
Printed in Canada
Editor: Eric Svendsen
Editorial Assistant: Lindsey Osteen
Developmental Editor: Susan Gaustad
Managing Editor, College: Marian Johnson
Project Editor: Sujin Hong
Production Manager: Eric Pier-Hocking
Managing Editor, College Digital Media: Kim Yi
Media Project Editor: Rachel Mayer
Media Editors: Cassie del Pilar and Miryam Chandler
Associate Media Editors: Victoria Reuter and Stefani Wallace
Media Editorial Assistant: Sam Glass
Marketing Manager, Economics: Janise Turso
Art Director: Rubina Yeh
Artist: John McAusland
Designer: Lissi Sigillo
Composition: Graphic World, Inc.
Manufacturing: Transcontinental Interglobe, Inc.
ISBN: 978-0-393-60376-7
W. W. Norton & Company, Inc., 500 Fifth Avenue, New York, NY 10110
wwnorton.com
W. W. Norton & Company Ltd., 15 Carlisle Street, London W1D 3BS
1234567890
, BRIEF CONTENTS
PART 1 PRELIMINARIES
1 Introduction to Macroeconomics 4
2 Measuring the Macroeconomy 18
PART 2 THE LONG RUN
3 An Overview of Long-Run Economic Growth 44
4 A Model of Production 70
5 The Solow Growth Model 102
6 Growth and Ideas 137
7 The Labor Market, Wages, and Unemployment 175
8 Inflation 205
PART 3 THE SHORT RUN
9 An Introduction to the Short Run 234
10 The Great Recession: A First Look 255
11 The IS Curve 278
12 Monetary Policy and the Phillips Curve 309
13 Stabilization Policy and the AS/AD Framework 347
14 The Great Recession and the Short-Run Model 385
15 DSGE Models: The Frontier of Business Cycle Research 415
PART 4 APPLICATIONS AND MICROFOUNDATIONS
16 Consumption 448
17 Investment 470
18 The Government and the Macroeconomy 496
19 International Trade 520
20 Exchange Rates and International Finance 547
21 Parting Thoughts 583
iii
